4 October 1994 External T.I. 9425255 - SCIENTIFIC RESEARCH - GENERAL

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

XXXXXXXXXX				5-942525

Attention: XXXXXXXXXX
October 4, 1994
Dear Sirs:

Re: Approved Research Institute

This is in reply to your letter dated September 28, 1994 wherein you requested a list of the information necessary to enable this Department to examine a request for approval of a research institute for the purposes of the deduction provided in subsection 37(1) of the Income Tax Act ("Act") and the related tax credit. You also requested information with regard to the time required to obtain such approval.

A research institute, in order to be considered "approved" for the purposes of subsection 37(1) of the Act, must receive written approval from this Department's Minister.

In order for an institute to become an "approved research institute", it must meet the following criteria:

(a)it must satisfy the requirements for non-profit status such as, no personal benefit to members, no control of other associations, satisfactory provisions for distribution of assets upon dissolution, etc.;

(b)it must have the necessary facilities, premises, equipment and personnel to carry out scientific research and experimental development ("SR&ED"), as defined in the Act, on an ongoing basis;

(c)it must carry on only activities that are unquestionably SR&ED;

(d)the funding of the research institute must be sufficient to ensure ongoing SR&ED; and

(e)the general public must be a beneficiary of the results of any successful research.

To enable this Department to examine a request for the approval of a particular research institute, all the relevant information pertaining to the institute should be provided to us. Among other things, the following documents and information should be provided us:

(a)identification of the legislation or statute under which the institute was created;

(b)copies of the institute's charter and by-laws which should indicate, among other things, how its property will be distributed in the event of a wind-up;

(c)a detailed description of the institute's arrangements for obtaining funds;

(d)a detailed description of the institute's arrangements for disbursing funds;

(e)organizational brochures or any literature describing the institute's objectives and activities;

(f)financial statements for prior years, if any;

(g)budgets for the current year and future years, if any; and

(h)details of the research activities to be carried out by the institute in the future and evidence that it has the staff and facilities to carry out such activities.

Due to many variables involved, it is not possible to foresee the time required for the approval of a particular institute. Our policy is to respond to requests in the order in which they are received.

Yours truly,
for Acting Director
Manufacturing Industries,
Partnerships and Trusts Division
Rulings Directorate
Policy and Legislation Branch